the great chris matthews is next so don't move. the gift that keeps on giving. let's play "hardball." ♪ good evening. i'm chris matthews in los angeles. let me start tonight with this. we now know how mitt romney is without a script. the words that come into his head like that 47% stuff from may that got out in the campaign are just bad. the evidence is that this guy's default switch says, blame the little guy, calm him a mooch, a taker a parasite, someone up to sale for anybody who is really to pay. the older person, the minority, cross their palm and they will pull the lever for you. cash and carry. the smart conservatives know this is no way to treat a

potential voter. a columnist i usually only agree with about movies put it this way. romney didn't say that the election had come out as it did because obama's team had outplayed and outfoxed his. he should have because that's the truth. rather, he said that obama had won the second term essentially through bribery. well, look, i have three rules for both parties as they converge now to do their squoobs. respect the voter, respect each other's offices, and search hard for common ground. those are what we should be doing and that should be the way we're guiding our country's conversation today. not trashing the people who voted against you. but respecting the fact that they did for your own good. david corn is washington bureau chief for mother jones and joy reid is managing editor of the grio. both are msnbc political analysts. let's take a look at some of the stuff from john mccain here. it's been four years since john mccain lost his presidential bid. just ten days since mitt romney lost, but they still be both holding a grudge apparently against the president in their bitter comments this week.

listen to romney's conference call about obama's gifts and mccain's complaints about obama ally u.n. ambassador susan rice. >> what the president's campaign did was focus on certain members of his base coalition, give them extraordinary financial gifts from the government, and then work very aggressive to turn them out to vote. >> susan rice should have known better, and if she didn't know better, she's not qualified. she should have known better. i will do everything in my power to block her from being the united states secretary of state. >> joy reid, let's go after romney first and the way he's calculating how he lost. now, you can give all kinds of reasons for losing and fair enough, that's what you do in your head. but when you spout the argument that the other guy bought all the interest groups, all the categories of citizens and that's -- that seems to di anyone initial not just the purchaser but the purchase. you're basically saying these people were up for grabs, just buy them.

you're never going to get them ever again if you talk about people that way it seems. >> exactly. and talking about more than half of the voting public as essentially bribery victims or being duped because they were given bobbles by the administration, you know, it's ridiculous and insulting and precisely to some of the groups republicans needs to do better with. lahtino leaders were outregione by this, african-americans were outraged. they went after women, essentially everyone. what they're basically arguing is government is nothing more than a transaction of government giving you things in exchange for votes. it's an understanding of government that to me renders him unfit to be the leader of the united states government. if that's really what he thinks that government comes down to. because the things he was describing that the obama administration did, that is called governing. >> yeah. i think -- same question to you, david, why would he use words like this? i think it's the way he thinks unless he's being scripted. 47% was unscripted. this is unscripted. this could be the pure romney. >> i was the first guy in the media to see the 47% remark.

when i saw it i couldn't believe it, but i thought maybe there was a slight chance that maybe he was saying it to play up to the that crowd. he knew that's what they wanted to hear. but now when we hear how he talks about voters, he didn't just say yes they were bought off, that obama won the their votes through bribery. he said i ran a campaign ever big ideas, but these other people out there, they don't care about it. they're just in it for themselves, so they are the moochers, they are victim who are looking at who will pay them the most. in the end what happens mitt romney portrays himself as a victim of the victims. it just confirms all the worst impressions from the 47% rant, and now you have republicans running away from him and basically saying, hey, don't let the elevator door hit you on the way out. >> i mentioned before john, who i usually agree with on cultural issues, not ideological issues because he's a smart guy. he writes for the weekly standard. i read the back of the book. i don't agree with the front of

the book usually. it seems to me he had a good point in his column. he said romney's whole campaign was aimed at entrepreneurs, job creators, the titans of industry, the ayn rand type that is see themselves that way ignoring all the people that work for a living, work 50 or 45 or 40 hours a week, show up for work, do their jobs. most people are like that. he said if you live in your party simply to people who see themselves as titans of industry, you will have a very, very small notion of america and a small electorate working for you. >> exactly. basically this would say a candidate of the boss. and he left basically everyone else to the president, to barack obama, and i think if you're going to be the party of just the boss, you have to presume that, a, either everyone loves and adors their boss who is willing to vote for a guy who essentially boils down to nothing more than a ceo or you limit yourself to only the rich, to only people who, by the way, are not just waelty, but who actually as david said, they feel like they're the victims in society. they're actually being put upon

by the moochers, by everyone else who essentially isn't as good as they are, who doesn't deserve the things that they're getting from government. but what romney forgets is that some of the people who receive from government include his own base. you're talking about seniors who, you know, are probably the larkest recipients of government, of government programs. and so he left off so many people and showed such disdain that it's no wonder he couldn't get a majority of votes. >> let's go through some of the people and what they have said about him now that they have discovered this guy. i think you're right, david, they should have known what they were dealing with long before the election returns came in, but people like to be with the winner, right, left, and center in that regard. as we've been saying this week, so now you tell us. more republicans are backing away from romney's gift language like new mexico governor susana martinez who said, quote, that unfortunately is what sets us back as a party. our comments that are not thought through carefully, or take marco rubio who told politico, i don't want to rebut him point by point. i would just say to you, i don't believe that we have millions

and millions of people in this country that don't want to work. i'm not saying that's what he said. i think we have millions of people in this country that are out of work and are dependent on the government because they can't find a job. that was carefully carved. and then there's chris christie, the governor of new jersey, who had this to say on "morning joe" just today. >> i voted for mitt romney, but the bottom line is we lost. and so now what we need to do as leaders of our party is pivot and get back to our jobs. and if we do our jobs well, people will put us back into office and if we don't, they won't. >> is it time for mitt romney to move on and stop having conference calls? >> that's up to him. i mean, listen, mitt romney is a friend of mine. i understand he is very upset about having lost the election and very disappointed. >> but it's not helpful, right? >> of course not, joe, but he's a good man and he will find his level, and i think it's still a little raw. so do i wish he hadn't said those things? of course not. but on the other hand, i'm not going to bury the guy for it. >> you know, it's interesting i want to go back to joy on this, this is just sheer human nature.

i thought and i liked to think i'm fair about this, i thought that romney walked off the stage election night as a noble figure in politics. however the campaign had gone in some very bad directions, i believe he ended it in the right direction with nobility and graciousness and generosity, and i would use an old frank sinatra term, class. i thought he did it, came out alone, didn't bring his wife, didn't cry on anybody's shoulders, didn't surround himself with family. took the loss, said he had a good running mate, a great campaign team, and he was praying for the president. maybe that was shock. he was still, you know -- but a week or so later he's out there saying terrible -- not just terrible, we're all buying votes and selling votes, but making himself look like kind of a jester. >> yeah, sneering at the public that refused to take the opportunity to make him their president. that's not a way to go out. i think you're right, chris. i think a lot of times politicians show who they really are and show their character in loss, in defeat, almost more

than they do in victory. if you recall, you know, yes, we can, was a concession speech. that was the time when barack obama soared, when he lost to hillary clinton in new hampshire. sometimes you show of who you are in loss. i thought the night he conceded mitt romney for having apparently done that in an hour thought he did a good job. i thought if he remained silent or came across as a conciliatory person, he might have had a future. now i think he's of no use. >> we're finding out very quickly here that -- >> there aren't many of them. >> mitt romney is now the loneliest man in america. there's no one in the republican party with any loyalty to him. he didn't really represent any ideas -- >> because he wasn't one of the right wing -- the right wing didn't really trust him, the moderates gave up on him. everybody thought he was playing a charl tan act in their favor. ed rogers told "the washington

post," there's no romney wing in the party that he needs to address. he never developed an emotional foothold with the gop so he can exit the stage anytime and no one will mourn. so i guess i want to address a question to joy here. you know, among minorities, among people that are perhaps generally democrats but, you know, for example the african-american community, you know the history as well as i do or maybe better, they were about 2 to 1 democrat going into the '60s. because of what jack kennedy did, wonderful call of consolation to mrs. king when her husband was in prison, what he did on civil rights with lyndon johnson, the community went about 99 to 1 pro-democrat but it was only 2 to 1 you're only losing a third of a black voted if you're a republican. you're doing okay in big states. you start losing a community of the size of the african-american community which is 10% to 15% you're losing 80% net of that community. if you keep talking like romney is talking, you're going to keep losing it. i think it is about percentages. you're not going to bring back

the whole black community if you're a republican, if you can get a third of it, a third of the hispanic community, you change everything. >> when i look at the hispanic community, i see the african-american community in the '60s. the southern strategy broke the relationship, severed it which had been a historic and long relationship between the african-americans and the republican party. i know elderly african-americans who stick with the republican party because of the history but the southern strategy broke that. at the time in the 1960s before that happened, black people broke about the same percentage democrat to republican that latinos do now. think about the fact that in this election we went from about a 65% democratic hispanic electorate to 72%. if that trajectory continues 10, 15 years no now, latinos will be where african-americans are and that will make winning national elections extremely difficult for the republicans. >> don't forget about the youth vote. one of the things that mitt romney talked of as a gift was college loans for kids which -- >> he said they were being written off and it's a complete

lie. you still have to pay student loans. >> he was wrong, but the whole point of giving people a break on college or making it easier for them to go to college is that is how we invest in our economy and we compete better with china, india, and brazil and he seemed totally lost on that point. >> don't forget the facts, he's wrong on that. nobody said you don't have to pay interest on student loans. >> and if you lose the young vote and they end up voting for democrats two, three, four times in a row, that's going to put the republican party in a similar hole. >> not only that but the african-american community and latino community both read the signals, saw the voter i.d. stuff, the disdin that was shown for the ability of african-americans and latinos to vote. a lot of the voter i.d. stuff was directed squarely at latinos -- >> we're burying this guy. he's about 20 feet in the ground now. we keep shoveling the dirt on. one thing i want to stop here, if he only realized kids didn't need student loans and that

makes him lucky, fortunate. you have to learn those things when you're rich. this is special. anyway, thank you joy reid. i got to go. thank you, david. you guys are great. please come back as fast as you can. coming up, the general on the hill, the general dade petraeus has probably got more ink than president obama and for all the wrong reasons. today he testified on what happened on benghazi. we're going to talk to a member of the house intelligence committee who was in that room when petraeus spoke in that closed door hearing. also, the fiscal cliff. how much room will the interest groups give the president po make a deal in they met with the president today and yesterday and they told them where they stand. and guess who showed up at parks and recreation last night on the show? >> on behalf of the president and myself -- >> oh, mr. vice president, i am deeply flattered, but there's no way i could take over madam secretary clinton's position. >> wow. vice president biden goes hollywood in the "sideshow." let me finish with this question, can obama's second term be a true reach for greatness? this is "hardball," the place

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republicans are becoming something of an endangered species in california. today republican congressman brian bilbray who has been on the show lost his bid for re-election in the san diego area. bilbray conceded the race to democrat scott peters. in his state's newly drawn 52nd district. last night the associate the press called the race in the seventh district. there longtime republican congressman and "hardball" guest dan lundgren is out. tote notre dame guy. that brings california's congressional delegation to only 15 republicans. wow. we'll be right back. grand chero, tell them it's like being nestled in an eight-way, adjustable, heated and ventilated seat surrounded by a 500-watt sound system while floating on a suspension made of billowy clouds.

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welcome back to "hardball." david petraeus has been headline news all week and for all the wrong reasons. his extramarital affair with his biographer paula broadwell. today he was on capitol hill talking about a less prurient

but more consequenceal matter, the attack on americans on benghazi. arriving through a secret entrance this morning, the former cia director made his way to the hill for closed meetings with the house and the senate intelligence committees to testify about that september 11th attack, an event he said and always believed was an act of terrorism. democratic congressman adam ship from california sits on the intelligence committee and was in the hearing room this morning. congressman, this is so sensitive. is it true or not true that the united nations ambassador susan rice was given the correct known information about what happened in benghazi when she went on those five television shows on sunday a few days after the attack. was she given the accurate up to date information on what happened, that it was a terrorist attack? >> he was given the best asse assessment the intelligence committee on at the time. i asked general petraeus, were the talking points we were given

their best intelligence assessment at the time and they were given that late in the day on saturday, late in the afternoon, and he said, yes. these are -- this was the best assessment they could do without disclosing classified information. -- >> whoa, whoa, stop right there. he also said according to what i heard in the testimony today that he always believed there was a terrorist attack. >> yes, he did. >> how can that be both true? if he gach her the honest testimony to give to the television programs that sunday after the attack, which was a terrorist attack, then she never got told that. he knew it and didn't tell her. >> well, no, you know, i think what the general was saying that when he first briefed the congress he felt and i think many of us did, you shoot mortars and rpgsed a an american diplomatic post, that's an act of diplomatic terror. the question was who committed the acts and how do we find them and bring them to justice. what the intelligence community got wrong and the general acknowledged that this was wrong

is that they thought initially that this was a protest that was either hijacked or got out of control that certainly terrorists and extremists were involved in, but that it began with a protest. it did not begin with a protest. but the key thing in terms of the master is the ambassador was given, as we were, the best assessment at the time as flawed as that was -- >> i am a clear thinker, let's be clear here. did he believe from the very earliest dispatches he got and cables he got on this, did he believe it began as a protest or did he believe it was always a terrorist operation? >> no, he believed that it began as a protest but he also believed that terrorists and extreme itss were involved, that's i think consistent with what he said at the time although, you know, at the time he also caveated as all of the intelligence community did that these were very initial reports, that they were going to get a lot more information and that we

needed to be concerned -- >> let's try it again. let's try it again. from what i understand today is he said he didn't give her all the information because he wanted to give up some classified so he wouldn't give up our sources over there -- >> chris, first of all, he didn't say he gave her this information. >> well, the cia director signed off on the talking points that she used to go on the tv shows, isn't that right? >> he said he signed off on the talking points that we were given as members of congress. he doesn't know what talking points the ambassador was given, but i asked him that to the degree that what she said on those sunday talk shows tracked the talking points that we were given as members of congress and it tracked almost identically, was she giving the intelligence community's best assessment at the time that did not divulge classified information, his answer was yes. you know, it was clear from his testimony that, number one, they were wrong about the protest, the ic, the intelligence community was wrong. number two, there was never an effort to politicize this --

>> that's a loaded word. let's stay away from loaded words. >> well, chris, this is the allegations that's being made. and so to the degree that -- >> that's interpretative. that's interpretative. i want to get to -- >> sure. >> here is the question. mccain and graham, they're out there pushing the case that she misled the american people, she should not be secretary of state or even considered for nomination because she misled on purpose. is there any evidence that she did? >> absolutely not. absolutely not. and, in fact, if ambassador rice departed from what the intelligence community told her and told us was their best assessment, then she's open to legitimate criticism. but she didn't. she took what the intelligence community said, this is our best sense of what happened. >> okay. >> how can you fault her for doing that. >> i think she's clean. my problem is with petraeus. from the day he saw the news reports and what she said on the sunday shows, including "meet the press" from our network, from the day how he saw how she categorized it as beginning as a protest and being hijacked by

the bad gives with rpgs and heavily harmed from the minute he heard her say that and learned it was not the case, why didn't he correct the record. >> at the time he heard her say that, that is what he thought took place. he did begin -- >> whaen was he disabud of that. when did he learn the full story? >> i think we -- >> when did he learn it? >> i think he learned the full story in the most gask way when we got the video evidence and that was not until well after she appeared on those sunday talk shows. now, the legitimate questions about why didn't we get that evidence sooner -- >> why didn't he give it to us? >> why didn't the general give it to us? >> he knew the country was misled perhaps by accident, i'll take that, by the secretary -- ambassador to the u.n. we were misled. we were all believing what she said. we all thought this -- >> hold on a second, hold on a second here. when you say misled, that is a politicized term. there was nothing deliberate about this. unless you bloo believe that general petraeus and the deputy

director, now acting director morell and the dni director were in on some conspiracy, they were doing their job. and, yes, they got it wrong. >> you're missing the point. i'm delling with the news here as we get it. i don't like rolling disclosure. at some point he got the full story. why didn't he come forward -- why did he have to be dragged into that hearing room today and put before both committees to get the truth? why are we only getting the clarification today? why didn't he as cia director go to the president, the public ought to know what happened. why didn't he do that? >> the intelligence community put forward the assessments that gave us a clear assessment and debunked the idea there was a protest. you can accuse them of being too slow to do that and we have asked them exactly these questions why it took so lock to get to the trooet and get a more ak trat picture. they need to put this forward to us in a way that doesn't divulge classified information. but i don't think there's any evidence, i certainly haven't seen any evidence, that general petraeus or any of the other

intelligence community were trying to mislead anyone. they are professional. they were trying to do their job and we can fault them for getting the initial assessment wrong, but i don't think we can ascribe any kind of malice or intent to deceive. >> when your pants are on fire, someone should tell you your pants are on fire. you shunt have to ask are my pants on fire. that's my view. i'm going to try to get more information. congressman adam schiff from your california, thank you for your straight story. jonathan allen is covering it story from politico. do you see what i'm trying to get at. we want to know why it took so long to get the straight story. the picture developed like a polaroid film in the old day. it was really always a terrorist attack in the sense the terrorists organized the event. didn't take advantage of it, didn't hijack it, it was their event. >> by definition these guys attack a u.s. embassy, they're terrorists. this is not rocket science and these are nice glass houses and glass senates the folks in the hill are living on where they suddenly think it's a crime to go out and use talking points that aren't honest.

geez, that was a crime 535 members of congress would be in jail for it. i'm listening to this, i have listened to congressman schiff and other members talk to folks who were in the room with david petraeus. no matter how many conversations you have, nothing is clear about the time line of when our intelligence community knew this was a terrorist attack versus some video inspired protest inspired event and why that wasn't brought forward. obviously the american public have a right to know why an american ambassador and three other americans were killed there and whether there was anything we could do to stop it from happening then, to give them support, or to prevent something like that from happening in the future and we're not getting thosance, at least not in the public right now. obviously the members of the intelligence committee are getting some kinds of answers but when you talk to them, you get a completely different read on what happened. some folks say petraeus was talking about terrorism on day one. others say he's evolved from this video plot or this video

story to terrorism today. and it's not necessarily partisan. these guys are all over the place. it's like they're in the same room and they have no -- >> that's a good candidate. he says it was -- we're trying to find what was the event caused by. thank you, jonathan allen. i think it's a great summation. up next, vice president biden's appearance on "parks and recreation." a lighter note coming. this is "hardball," the place for politics.

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back to "hardball." now to the "sideshow." first up, fans of nbc's "parks and recreation" know that amy poehler's character, her name is leslie nope, has interesting criteria for her ideal man. quote, she wants the brains of george clooney and the body of joe biden. well, in last night's episode she got part of that equation. take a look. >> you must be leslie nope.

welcome. welcome. >> my name just came out of your mouth. >> well, yeah, it did. i'm delighted to have you here. on behalf of the president and myself i want -- >> mr. vice president, i am deeply flattered, but there's no way i could take over madam secretary clinton's position. >> i'm confident you could do that job or any other, but the reason -- >> okay, i will. >> well, the reason you're here is i'm told you've done such a great job in your town and in the state of indiana and i just want to say congratulations for your public service. >> i just want to say thank you. you're very handsome. >> you're very nice but -- >> thank you. >> thank you very much. >> thank you very much. we'll see you tomorrow. >> well -- you will? >> you don't let anything happen to him. do you understand me? he's precious cargo. >> wow. biden's cameo is from last summer. it might have needed a little tweaking if the election turned out differently. what's the main thing that got in the way for mitt romney this past election? let's look at two of the more blunt assessments.

first karl rove, he thought the drawnout primary process and the debates worked against mitt romney in the general election or in his words from a speech in pennsylvania, mitt romney had what i scientifically call a butt ugly primary. good for you, karl. the election didn't exactly end well for reeve either having to haen to all the people who donated to his super pack in the hopes of a romney victory. then glen bulger who gave this blunt diagnosis for the loss at the republican governor's association conference yesterday. >> what we need to do one is we need to convert and get more republicans because if we're going to win independence and get republicans and still lose an election, it's because there's too many damn democrats out there. >> toot many, quote, damn democrats, that's one way of summing the arithmetic. david letterman also weighed in with some potential scapegoats on his top ten list.

>> number nine, properly functions voting machines. number six, congressman todd akin's biology teacher. number four, this guy right here. that guy. there's paul ryan. number three, fact checkers. i don't get this one either. number two, the republican party for nominating him. ouch! oh! >> that's good stuff. the fiscal cliff. while the interest groups give president obama room to make a deal? we'll talk with two of them who met with the president today. you're watching "hardball," the place for politics. i don't spend money on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount

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i'm courtney reagan with your cnbc market wrap. stocks did end higher. the dow rises 46 points, the s&p 500 up 6, and the nasdaq gaining 16. facebook shares jumped 6% in the post lockup expiration rally continued.

the stock is it up 20% this week. however, dell moved into the opposite direction sinking 7% after earnings missed expectations. and a sad day for twinkie lovers. hostess is seeking to go out of business after failing to cut a deal with striking workers. that's it for cnbc, we're first in business worldwide. for now, back to "hardball." ♪ our challenge is to make sure that, you know, we are able to cooperate together, work together, find some common ground, make some tough compromises, mr. some consensus to do the people's business. >> still seems a little tired from the election there. back to "hardball" today. president obama met with congressional leaders to kick off talks to avoid that fiscal cliff. it caps a week in which he's reached out to union leaders, business leaders, congressional leaders to soften the ground for

a deal. the congressional leaders, boehner, reid, pelosi, mcconnell, were optimistic but cautious about a deal. >> to show our seriousness we have put revenue on the table as long as it's accompanied by significant spending cuts. >> we have the cornerstones of being able to work something out. we're both going to have to give up some of the things that we know are a problem. >> we should have a goal in terms of how much deficit reduction. we should have a deadline before christmas. we should show some milestones of success so that confidence can build. >> we're prepared to put revenue on the table provided we fix the real problem. >> the real problem. you got that? mcconditional is all the tree stump on the lawn when you're trying to cut it. this afternoon the president held his fourth and final meetings with stakeholders, civic leaders and meshs of civic leaders. mark morel is president of the

you are began league and aaron smith is co-funder of a group called noninvincibles dedicated to ensuring that young people's perspectives are accounted for in policy and economic opportunity, education, and health care issues. thank you both. i want to start with mayor morel. what can we do about this debt problem? it's growing. do you accept the fact it's a serious threat to our country? >> yeah. the deficit is a serious threat. we need a lone-term fiscal plan, not a short-term fix. the idea is there has to be shared sacrifice to achieve shared prosperity. >> aaron with the same question. do you believe the national debt as it's grown up around the size of our gdp, we owe as much as we make every year, is that a dangerous position to be in or not? >> well, i think there are definitely tough choices we have to make about how we're spending our money and being sustainable. i think there are smart ways to make government more efficient.

if you look, for example, we spend about $93 billion every year in social services for unemployed young people, young people who are not connected to school. we only spend about $2.5 billion for job training programs. if we invested in the kind of job training and education that young people need, that could grow our economy and it could reduce some of the government expenditur expenditures. >> let's get to cuts. where would you get $4 trillion in cuts over 10 years? >> who are you asking? >> i'm asking aaron. >> okay. >> cuts. what would you cut to get down to save $4 trillion? >> i think we should start, chris, by talking about what our priorities are. >> i'm asking you, where are the cuts? give me some ideas -- big chunks of federal spending. big increases in federal revenue to erase that $4 trillion debt we're trying to get rid of. >> again, chris, i reject the premise that we should start from the focus of cuts when the real priority for young people is jobs and it's making college more affordable.

>> okay. we're talking about debt reduction and the president's problem of avoiding the fiscal cliff and i got to get back to the mayor. i want to go to ways we can actually do this. i know everybody has to give something. i'm wondering what people are willing to give. mayor, what are the areas that affect the big cities? >> the big cities are affected by housing, community development investments, education investments, which i might add have already taken cuts. this is what's important is that this is not happening in a vacuum. this is a continuum of looking at with the sequestration and the debt deal where have the cuts already taken place. let me give you an example. community development bloc grant, title one, head start, workforce investment act which is job training. these have taken cuts. the most important thing is, one, to sustain, sustain the middle class tax cuts because to allow them to he can pir would mean a $3,000 hit for someone

who makes $50,000 a year. it's important to understand that revenues and expenditures go hand in hand and any plans got to include all. >> that's right. let me get back to aaron. there's three ways to reduce the debt, increase revenues, reduce expenditures on entitlement programs, or reduce expenditures on regular appropriationings. if you were sitting with the president and he's sitting there with a pencil and paper trying to figure out the arithmetic how could you help him do this thing when he has to do it? >> let's start by putting some of our spending in perspective. the cost of the bush tax cuts for those above 2% is about $80 billion a year. we only spend about $60 billion a year on our whole education system from a federal perspective. so obviously that's something that's got to be on the table. i agree with marc about the point about middle class tax cuts, things like payroll tax cuts, the aotc, those are critical. there's issues about pell grants which have a shortfall in the future. but i think we need to start with those tax cuts on the upper

income earners -- >> would you -- >> 80% of young people support getting rid of those tax cuts. >> would you do anything besides raise taxes on the rich? >> i think there are ways we could make some of these programs more efficient by investing in the front end in education and training that in the long term can reduce -- >> mayor -- >> -- over a long period of time. >> i want to aur this perspective because in the entire conversation what's been missing is the military where military expenditures for the united states are greater than that of the next ten nations combined. so when you talk about putting everything on the table, domestic discretionary is about 14% to 15% of the budget. you have got to have all appropriations on the table. you have got to have all tacks on the table. you have got to have a comprehensive look. but our starting point is to sustain those middle class tax cuts and from a principled position, i believe that those who are most vulnerable

shouldn't take the biggest hit, the must substantial hit, and i have confidence that the president is going to take those principles into these negotiations. >> i think we found out something here very important from a progressive point of view. we have to go after the rich tax breaks at the top. they have to lose those things at the top. the clinton era 39.6% rate. it doesn't hurt our economy in the '90s. we have to do something about the defense budget as part of the discretionary spending. we've got to do that. and we shouldn't whack the middle class again. they've been whacked for 12 years. thank you marc and aaron. good luck, both of you fellows. as the rich gets rich and the middle class stag nats, a new book asked who stole the american grem. one of the great journalists joins us next. this is "hardball," the place for politics. billion dollars to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america.

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this week i told you about a few of the groups doing real work, the good work on the ground in the new york city area helping victims of hurricane sandy get back on their feet. gets your pens out and write down this information for yourself. starting with the dr. theodore atlas foundation, it's run by teddy atlas whose father was a doctor on staten island for half a century. they're raising money for people facing dire straight. dratlasfoundation.com. in the bell harbor section of queens where so many of the city's first responders, cops and fire people and all those come from, the church of st.

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well, a little historic perspective shows why the republican argument is false. and veteran journalist hedrick smith harbors that perspective in his new book false. in the last 40 years, the middle class has been squeezed financially. and sidelined politically. the average worker's salary remained flat and retirement security has largely disappeared. but the pay for ceos has skyrocketed from 40 times the salary of the average company worker in 1980 to 4 times it by 2000 all made possible thanks to powerful corporate interests in washington which shifted the balance of power politically. hen rick smith joins us now. rick, thank you so much for coming in. i'm going to let you make your message without a lot of q & a. what is the kernel of how people have been squeezed? because they know they've been squeezed. >> of everybody tells us the middle class has been squeezed because of globalization and technology, because of market

forces, impersonal forces. when i dug into this and started to look back, what i found out what really happened when you were working for tip o'neill as speaker of the house, that was when there was a power shift. louis powell who was corporate attorney named to the supreme court by richard nixon actually wrote a memo and said, we're getting killed. business is getting killed politically by the environmental movement, by the labor movement, by the women's movement, by the consumer movement. ralph nader and those guys. he said, get to washington, take the high ground. and sure enough, literally within months, the business roundtable was formed, can national association of manufacturers move their head quarters to washington. there were 175 companies when powell wrote his memo that many lobbying offices in washington. several years later, there were 2,400. 50 thous people working for

business trade. they stuffed the consumer movement. they got deregulation, they got tax cuts, all kinds of things. so the power shift tilted the policy towards business, towards the wealthy. that started in the late 70s late rally when you and i were there. starnlths you had what i call wedge economics in the economy. used to be that the prosperity, the growth of american productivity was shared. middle class had its share along with the owners, along with the shareholders. the productivity of the american workforce doubled from 1945 to 1975. >> i know a lot about this. there's gucci gulch for all the lobbyists tell us how to write tax policy. a lot of businesses draft the bills and draft them for the republicans. talk how that works. i don't think the public knows some of that. >> they're doing exactly what you're saying. they started out by doing it. the 401(k), it was never intended to be a national

retirement plan. it was stuck into the legislation by barbara conable, an upstate new york republican as a favor to xerox and kodak because they had their head offices in his home district. they wanted a tax shelter for retirement payments to executives. that's how it started. they wrote it. it was 401(k) because it's 401 provisions down in the tax code. it was so small nobody knew it was there. you guys didn't know it was there. >> instead of having a solid pension with a guaranteed annuity coming to you, you have 401(k)s which have shrunk in many cases over the years. >> what you got is hundreds of billions of dollars of expenditures are shifted from the corporate books into the pocketbooks and wallets of ordinary people. it's a disaster. the average 401(k) balance today is $18,000. the median 401(k) balance for people on the verge of retirement after 20 years in the 401(k), is only $85,000. the corporations saved enormous

amounts of money and the people are having to spend a lot more money and not saving enough. >> we have to have you back again and again. this is great stuff. a lot of our progressive viewers don't know the details. thank you so much. they know the squeeze is real. rick smith, the book is called "who spoel the american dream." thanks for joining us. when we return, let me finish with whether president obama will reach for greatness in his second term. you're watching "hardball," the place for politics. t, dad, you'. [ voice of dennis ] allstate. with accident forgiveness, they guarantee your rates won't go up just because of an accident. smart kid. [ voice of dennis ] indeed. are you in good hands? can i still ship a gift in time for christmas?

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let me finish tonight with this. a leader must have a mission. an american leader especially. we are frontier people, happiest most excited most american when we're on a quest. presidents need to know that. great presidents know it because it's who they are, why they set out to lead us in the first place. all our great leaders, washington, lincoln, fdr, kennedy were men with a mission. washington led us into nationhood and defeated the most powerful military force in the world by a brilliant retreat till he caught the british sleeping. then he did something remarkable, setting the model that made him truly great. walking away from power twice. as our first elected leader. he would have been without match until lincoln came along. championing a bloody civil war that are cost us 600,000 countrymen shooting at each other with their blue and gray uniforms, their only cover.

he iman pay theed slaves and through it all began the healing. finally came roosevelt who carried us through the great depression and world war ii yielding us up as the leading country of the modern world by force of human will, getting this country to prevail against the toughest challenges through the strength of his own confidence. one author said he knew who he would win the war just hearing fdr declare it. kennedy a hero in world war ii, led the country through the cuban missile crisis. created the peace corps and took us to the moon. my book on him, jack kennedy elusive hero is just out in paperback. now for barack obama. he's given us health care and a discrimination based on -- begun the case for marriage equality, toughened the fight against terrorism. will he now bring us fiscal and immigration policies that secure a confident,